Denmark’s ATP has revealed the highest return since 2021 on its geared investment portfolio, with gains on foreign equities having provided the lion’s share — helped by 100% dollar hedging as well as below-index exposure to the US market.
Presenting its 2025 annual report in Copenhagen, the Danish statutory pensions giant said its investment portfolio — which consists of the scheme’s bonus potential plus leverage by borrowing from the much larger bond-based hedging portfolio — produced a 19.5% return.
Martin Præstegaard, chief executive officer of the DKK694bn pension fund, said: “With a return of just under 20% in 2025, we’re in a good position to be able to increase the ATP pension again, just as we did most recently at the beginning of 2026.”
Of the total DKK21.4bn full year investment portfolio return, DKK18.7bn came from listed foreign equities, with only DKK2.8bn from Danish listed equities. Government and mortgage bonds ended the year with a DKK9.1bn loss, while private equity returned DKK3.1bn, and real estate and infrastructure each returned DKK1.3bn, according to the report.
Præstegaard told IPE he was not concerned that almost all gains in the investment portfolio had come from foreign listed equities.
“We have a lot of exposure to foreign listed equities, and I am actually happy that the gains on foreign equities have been more spread out – so we’ve seen a strong Asia, strong emerging markets for the first time in many years, and US exceptionalism has not been a thing in 2025,” he noted.
“We have a lot of exposure to foreign listed equities, and I am actually happy that the gains on foreign equities have been more spread out”
Martin Præstegaard, ATP’s CEO
“If there are more diverse returns then that suits us well because we are equal weight compared to the index,” he said, adding that this meant the portfolio was underweight US compared to a world index.
Over the course of 2025, the US dollar weakened by slightly more than 10% against the Danish krone, ATP stated.
“We are totally hedged against the dollar, so we didn’t take any losses on its decline,” said Præstegaard, adding that many Danish pension companies had not been fully hedged against the US currency last year, resulting in the loss of some of their US equity gains due to exchange rate developments.
The main purpose of ATP’s bonus potential is to maintain the purchasing power of the guaranteed pensions paid out by the scheme.
Its board decided back in October, with the bonus capacity having grown to 21.3% in the first nine months of the year, to increase pensions for all members by 2% from 2026.
That was the fourth pension increase in the last 10 years, ATP said, and admitted in its annual report that inflation in recent years had rendered the institution unable to maintain the real value of its pensions.
“For a pension scheme, it will always be difficult to secure the real value of pensions during periods of unexpectedly high inflation,” it said.
While the investment portfolio alone has now returned an average of 10.4% a year since 2008, under the Danish pensions industry standard N1 measure – which gauges annual return relative to pension provisions – ATP’s overall return was just 5.0% for the period, according to the report.
ATP, which is governed by its own act of parliament, has come in for much criticism for having a business model that, inter alia, reins in potential returns.
Because of that, last year ATP appointed an independent evaluation group to review its investment strategy – work that Præstegaard said was expected to be completed in the first half of 2026.
